Unilever PLC

UL Details

Unilever PLC (NYSE: UL) is a global fast-moving consumer goods (FMCG) corporation that specializes in the Beauty & Personal Care (BPC), Home Care (HC), and Foods & Refreshment (FR) segments. Deodorants, skin cleaning, hair care, oral care, and skincare are the BPC segment's five categories. Laundry and household care items are available through the Home Care division. Food and ice creams are represented in the FR section. The company's products are sold in 190 countries.

Latest News:

• Transition in Leadership: On December 01, 2021, UL stated that Ritva Sotamaa, Chief Legal Officer and Group Secretary, will leave the company at the end of March 2022. Maria Varsellona, General Counsel & Corporation Secretary for global technology company ABB Ltd, will replace her. In addition,  Marc Engel, UL's Chief Supply Chain Officer, has also opted to leave the company in April 2022. Reginaldo Ecclissato, the current Executive Vice President of Mexico, Central America, and the Greater Caribbean, will be his successor.
• Divestiture of Tea Business: On November 18, 2021, UL announced that it had reached an agreement with CVC Capital Partners Fund VIII to sell its global Tea business, ekaterra, for EUR 4.5 billion in cash and debt-free terms. The transaction is expected to be completed in H2FY22. UL's Tea business in India, Nepal, and Indonesia and its holdings in the Pepsi Lipton ready-to-drink Tea joint ventures and associated distribution businesses are not included in the transaction perimeter.

H1FY21 Results:

• Minor Progress in Topline: Turnover increased slightly by 0.30% to EUR 25.79 billion during H1FY21 (ended June 30, 2021) from EUR 25.71 billion during H1FY20.
• Drop-in Bottomline: The net profit during H1FY21 was EUR 3.40 billion vs. EUR 3.54 billion reported in H1FY20, representing diluted earnings per share (EPS) of EUR 1.19.
• Underlying Growth Metrics: The firm reported YoY underlying sales growth (USG) of 5.4% in H1FY21, with volume growth (UVG) of 4.0% and pricing growth (UPG) of 1.3%.
• Leveraged Balance Sheet: As of June 30, 2021, the company's cash, and cash equivalents (including short term investments) stood at EUR 5.07 billion, with a total debt of EUR 27.54 billion.

Key Risks:

• Plastic Usage Risk: Plastic is used extensively in the packaging of the company's products. However, its long-term success hinges on reducing the amount of virgin plastic it consumes, increasing the use of recycled plastic, and enhancing the packaging's recyclability.
• Supply Chain Risk: The company's success depends on the timely purchase of supplies and distribution of products to customers. Unfortunately, physical disruptions, environmental and industrial disasters, trade restrictions, or issues with a significant supplier could affect its ability to deliver orders to its customers via the supply chain network.

Outlook:

• FY21 Guidance: As of November 01, 2021, UL stated that cost inflation remains at strongly elevated levels and will continue next year. It has responded and will continue to respond, across all of its categories and markets, by adjusting prices and employing various cost-cutting measures. As a result, it also expects to meet its FY21 margin projection, which is expected to be roughly flat.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

UL Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

UL's share price has fallen 15.44% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 50.60 to USD 61.81. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 40.99. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 63.85.

Considering the dip in the stock price, strategics divestiture programs, steady dividend yield, market dominance, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 51.25, down 0.37% as of December 03, 2021, 12:55 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

DSS, Inc.

DSS Details

DSS, Inc. (NYSE: DSS), formerly Document Security Systems, Inc., has nine distinct business lines grouped into five business segments, with operations and facilities all over the world. DSS allocates its earnings into printed products, rental income, and direct marketing. The packaging and Printing business, which produces custom consumer packaging for clients in the pharmaceutical,  beverage, photo packaging, and direct marketing industries, generates the majority of the revenues.

Latest News:

• Foraying into Investment Markets: The company launched DSS AmericaFirst Quantitative Funds on November 30, 2021. It's a collection of mutual funds managed by DSS Wealth Management, Inc., a DSS subsidiary, plans to grow into various investment platforms, including mutual funds, exchange-traded funds, unit investment trusts, and closed-end funds.
• Expansion Endeavors: On November 4, 2021, DSS stated that American Medical REIT Inc. (AMRE), its majority-owned subsidiary, has acquired three hospitals in Fort Worth, Texas, Plano, Texas, and Pittsburgh, Pennsylvania. The AMRE-acquired hospitals are now leased for 18 years, with eleven years remaining and the possibility to renew for another five years.
  

9MFY21 Results:

• Progress in Revenues: The company's total revenues increased by 29.56% during 9MFY21 (ended September 30, 2021) to USD 13.22 million from USD 10.20 million during 9MFY20, primarily due to an increase in packaging sales and continued expansion into the direct marketing industry.
• Increase in operating losses: DSS witnessed an increase in operating losses to USD 15.99 million during 9MFY21 from USD 4.81 million reported during 9MFY20.
• Decent Balance Sheet: As of September 30, 2021, the company's cash and cash equivalents stood at USD 69.14 million, with a total debt of USD 7.16 million.

Key Risks:

• Customer Concentration Risk: Two clients accounted for 43% of consolidated sales and 73% of consolidated trade accounts receivable balance in 9MFY21. In addition, these two customers accounted for 37% of the company's consolidated revenue and 48% of its consolidated trade accounts receivable balance in 9MFY20. As a result, losing any of these critical customers could harm the company's bottom line.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

DSS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

DSS' share price has fallen 77.18% in the past nine months and is currently leaning towards the lower end of the 52-week range of USD 0.75 to USD 7.15. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 23.78., indicating an oversold zone. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 0.95.

Considering the significant correction in the stock price, a surge in topline, expansion activities, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 0.76, down 6.16%, as of December 03, 2021, 10.28 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.